Cosmetics Industry

I INTRODUCTION

Cosmetics Industry, industry concerned with the manufacture and supply of cosmetics and perfumery products. It is a multi-billion dollar industry that spans the globe; making, marketing, and selling beauty products for men and women.

Praya Lundberg

Cosmetics are products that are intended to beautify the body, especially the face. In order to distinguish cosmetics from toiletries, the industry normally uses the term colour or decorative cosmetics to describe the following typical product categories: facial makeup, such as foundation, blusher, and loose and compact powders; lip products, such as lipsticks, lip pencils, and glosses; eye products, such as mascara, eye shadow, and eye pencils; and nail polishes.

II NATURE AND SCALE OF INDUSTRY

The pace of change in the cosmetics industry is fast, influenced as it is by fashion trends and rapidly advancing technology. Indeed, this underlying technological base has meant that the boundaries between the colour cosmetics industry and industry that focuses on toiletries such as skincare and haircare products are becoming less and less distinct. Indeed, most new colour cosmetics now also offer skincare benefits. Long-lasting lipsticks, for instance, were introduced in the early 1990s but met with complaints that they dried the lips. Hence, today’s products offer moisturizing skin care benefits. Similarly, skincare products often offer cosmetic effects: tinted moisturizers, for example, add colour as well as moisture to the face.

The total cosmetics and toiletries market was worth over US$150 billion in the year 2000, with retail sales of well over US$200 billion. Haircare and skincare are the biggest sectors, followed by colour cosmetics, bath and shower products, oral care, men’s grooming products, women’s fragrances, antiperspirant deodorants, and sun care. Taking colour cosmetics alone, 1996 data shows that the following countries were the biggest spenders: the United States (US$7.69 billion); Japan (US$3.38 billion); France (US$1.26 billion); Germany (US$871 million); the United Kingdom (US$807 million); Italy (US$741 million), Canada (US$260 million), and Spain (US$246 million).

The world’s three leading toiletries and cosmetics multinationals are Procter & Gamble, Unilever, and L’Oréal. The US-based giant Procter & Gamble sold US$7.1 billion worth of toiletries and cosmetics in 1997 alone. Unilever is a Dutch/English company, but it owns brands associated with various countries. French-owned L’Oréal controls a number of brands specific to various countries, as well as international brands.

III DISTRIBUTION AND SALES

Distribution of cosmetics can be mass market, selective distribution, direct sales, and duty-free.

Mass-market cosmetics are found on self-selection in pharmacies, chemists, supermarkets, and department stores, and have much lower price tags than the products marketed by leading prestige companies like LVMH (Givenchy, Christian Dior, Guerlain) Sanofi (Yves Saint Laurent), Estée Lauder, Shiseido, and Kanebo. These brands are sold through “selective” outlets, which the companies have vetted and deemed suitable for the “luxury” image of their products. Direct sales of cosmetics are dominated by Avon Products, a company set up in 1892, but now famous for its “Avon ladies”, who sell to people in the comfort of their own homes all over the world.

Loading...

IV COMPETITION, TESTING, AND MARKETING

The cosmetics industry is as serious as any other, and competition is fierce. Manufacturers spend enormous sums every year on research and development. L’Oréal, for example, employed over 2,500 people in the company’s research and development sector in 2000, and its investment in the sector was US$345 million.

Animal testing of cosmetic products, usually to check product safety, does still occur, although the trend is for companies to avoid this practice where possible. Indeed, the United Kingdom agreed to a voluntary ban on the testing of finished cosmetic products at the end of 1997.

The cosmetics industry also assigns large budgets for marketing to consumers via television, printed media, and, increasingly, via new technology, such as interactive CD-ROM booths that enable women to experiment with makeup before they buy. Since brand identity and product image is an important aspect of the appeal of cosmetics, the industry must devote considerable effort and expense to advertising, sales promotion, packaging design, and other sales strategies.